Simplify's New ETFs Target Tax Drag with Innovative Swap Structure

NEW YORK, NY – May 05, 2026 – By Ruth Flores

Simplify Asset Management, a firm that has rapidly carved out a niche as an innovator in the exchange-traded fund space, today launched two new ETFs designed to tackle one of investing's most persistent challenges: taxes. The Simplify Tax Aware Alternatives ETF (ticker: LQ) and the Simplify Tax Aware Diversified Income Strategy ETF (ticker: DINE) aim to provide investors with diversified strategies while actively seeking to minimize the tax drag that can erode long-term returns.

The launch comes as investors and their financial advisors increasingly shift their focus from pre-tax headline returns to the more critical measure of what they actually keep. “Investors are increasingly focused on what they keep after taxes, not just what they earn,” said David Berns, Co-Founder and Chief Investment Officer at Simplify. “With LQ and DINE, we’re giving advisors and investors tools that seek to improve after-tax outcomes without sacrificing diversification or income potential in a single, easy-to-use ETF wrapper.”

The Quest for After-Tax Alpha

For decades, the standard for portfolio construction revolved around a 60/40 mix of stocks and bonds. But in today's complex market environment, advisors are looking beyond traditional allocations to enhance returns and manage risk. This has led to a surge in demand for alternative strategies and sophisticated income solutions. However, these strategies often come with added complexity and, crucially, potential tax inefficiencies.

Tax drag—the reduction in returns due to taxes on dividends, interest, and capital gains—can have a significant compounding effect over time, particularly for high-net-worth individuals in higher tax brackets. While ETFs are generally more tax-efficient than mutual funds due to their in-kind creation and redemption process, Simplify's new offerings aim to take tax management a step further. The funds are a direct response to what the firm says it is hearing from the advisory community: a need for portfolio tools that are not only sophisticated and diversified but also elegantly simple and tax-aware.

A Novel Structure for Tax Efficiency

At the heart of LQ and DINE is an innovative structural design. Rather than holding underlying securities directly, the funds gain exposure to their respective strategies through total return swaps based on Simplify's existing ETFs. This is not just a matter of operational convenience; it is the core of their tax-aware approach.

These swaps are structured with tenors of at least one year. By holding the swaps for more than a year, any gains realized upon expiration are intended to be eligible for long-term capital gains tax treatment. This is a pivotal distinction, as gains from many derivatives and short-term holdings are typically taxed at higher ordinary income rates. This “bullet swap” structure, where a single payment at maturity can result in a more favorable tax outcome, is a mechanism Simplify has successfully employed in other popular funds, such as its managed futures strategy ETFs.

This approach represents a significant evolution in how asset managers can use the ETF wrapper to deliver tax-alpha. It moves beyond the passive tax benefits of the ETF structure and actively engineers a solution aimed at lowering the investor's tax burden, allowing more capital to remain invested and compound over time.

Reshaping Portfolios Beyond the 60/40

The two new funds offer distinct solutions for modern portfolio construction. The Simplify Tax Aware Alternatives ETF (LQ) is built for long-term capital appreciation and diversification. It provides exposure to a basket of alternative strategies that have low correlations to traditional stocks and bonds, including managed futures, commodities, currencies, and tail-risk hedges. For advisors seeking to build more resilient portfolios that can navigate different market environments, LQ offers a streamlined way to access these complex strategies in a single, tax-minded vehicle.

On the other side of the coin is the Simplify Tax Aware Diversified Income Strategy ETF (DINE). This fund also seeks capital appreciation but with a focus on income, investing across a range of strategies such as enhanced core fixed income, credit-hedged high yield, and option-based income. A key feature of DINE's design is its approach to distributions. Instead of generating large, regular taxable payments, the fund aims to minimize them. This gives investors, particularly those in taxable accounts, greater control over when they realize income and incur taxes, typically by choosing when to sell shares.

“Advisors are trying to balance diversification, income, and taxes, but too often, those items come with tradeoffs,” Berns added. “With LQ and DINE, our aim is to bring those pieces together in a way that makes sense.”

A Strategic Move in a Competitive Market

Founded in 2020, Simplify has experienced remarkable growth, amassing approximately $13.86 billion in assets under management as of early 2026. The firm’s mission has been to democratize access to institutional-grade, options-based, and alternative strategies that were previously out of reach for most investors. This latest launch is a clear continuation of that strategy.

By packaging multiple in-house strategies into a single, low-cost wrapper—both funds feature a net expense ratio of 0.15% after fee waivers—Simplify is directly addressing the advisor's need for efficiency. The multi-strategy “fund-of-funds” approach, utilizing swaps on its own ETFs, not only smooths out the volatility of holding individual strategies but also simplifies the advisor's due diligence and portfolio management workload.

As the asset management industry continues to evolve, the launch of LQ and DINE underscores a broader trend toward more holistic, outcome-oriented investment solutions. By combining diversification, income, and sophisticated tax management into one vehicle, Simplify is betting that the future of portfolio construction lies not just in what you earn, but in how efficiently you can keep it.